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Benchmarking your Construction Management (CM) approach Currently, a majority of the project owners are aware of how Construction Management (CM) services are procured within their respective organizations. However, most, if not all, of them do not have much clarity on how their peer groups procure the same services. - See more at: http://www.beroeinc.com
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Rita Williams Lead Analyst Beroe-Inc Dialing in from: India
Host
Domain Lead – Palani Darshan Beroe-Inc Dialing in from: India
Moderator
Discussion Segments
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How are CM services procured currently?
01
Is geographic and contractor consolidation possible?
02
Where is the CM market heading? 03
Construction management – Most adopted Delivery methods (1/2)
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Complexity
Nature of Geography
Type of construction
Criticality Project Spend
Time frame
In house Expertise
No of projects
Contractors
Construction management – Most adopted Delivery methods (2/2)
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Bundling CM Services- Contractor CM
CM as an Exclusive service
CM under Engineering
Procurement & Construction Management
Construction Management as a part of PM services
Construction management – Most adopted Delivery methods
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What are the most widely adopted CM delivery methods by peer industries?
Capability
50 – 250 mn USD
Prior Relation
Time Scale
Single Project
Bundling CM Services-Contractor CM
Multiple Parties
Not worked in the region
Local Contractor
Higher Risk
CM as a part of PM services
Construction management – Most adopted Delivery methods
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What are the most widely adopted CM delivery methods by peer industries?
High spend
Multiple projects
> 2 years
CM as an exclusive service
Complex
Multiple specialist
High Spend
Fast track
CM under EPCM
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CM – Contracting preference by Geography
• In developed regions: Contractor CM Or Bundling of other services with CM
Why Contractor CM?
1. Contractor capability
2. Experience of in house teams in the region
3. Engineering and Design Quality
4. Well versed in HSE policy
5. Lower Risk
Why PMC??
1. Complex Contracting laws
2. Immature supply chains
3. Lack of Safety Awareness & Unsafe work
4. Diverse Engineering Standards
PM managing CM
Design + CM Globally EPCM
CM : construction management PMC: project management consultant
EPCM: engineering procurement and construction management HSE: health safety and environment
• High spend • Complex • Multiple contractors
• In developing regions: Adoption of a PMC – Managing CM
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Distinctive CM approaches - Bundling of CM with Contractors
In developed regions, CM is invariably contracted as a bundled service.
GSK:
Project Type: vaccine
manufacturing facility - Belgium
Contractors: PM Group
Delivery Type: EPCM
Eli Lilly:
Project Type: Industrial
Contractors: Fluor Daniel, Cockram,
Hochtief Turner
Delivery Type: Multiple EPCM
projects in North America/Europe
Nestle U.S :
Project Type: Industrial: Bottling
plants and distribution facilities
Contractor: Gary Engineering – 11 projects in the U.S.
Delivery Type: Design + CM
Nestle Europe:
Project Type: Industrial: Manufacturing facilities – Multiple
Contractor: PM group and M+W –
in Eastern Europe
Delivery Type: Design + CM
Kraft foods - Europe
Project Type: Industrial:
Coffee Production facility
Contractor: PM group in UK, Switzerland, Germany
Delivery Type: Design + CM
Coca Cola - UK
Project Type: Manufacturing and Distribution Centers
Contractor: Faithful +Gould –
Nationwide project execution
Delivery Type: Design + CM
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Distinctive CM approaches - Bundling of CM with Contractors
In developed regions, CM is invariably contracted as a bundled service.
GSK:
Project Type: vaccine
manufacturing facility - Belgium
Contractors: PM Group
Delivery Type: EPCM
Eli Lilly:
Project Type: Industrial
Contractors: Fluor Daniel, Cockram,
Hochtief Turner
Delivery Type: Multiple EPCM
projects in North America/Europe
Nestle U.S :
Project Type: Industrial: Bottling
plants and distribution facilities
Contractor: Gary Engineering – 11 projects in the U.S.
Delivery Type: Design + CM
Nestle Europe:
Project Type: Industrial: Manufacturing facilities – Multiple
Contractor: PM group and M+W –
in Eastern Europe
Delivery Type: Design + CM
Kraft foods - Europe
Project Type: Industrial:
Coffee Production facility
Contractor: PM group in UK, Switzerland, Germany
Delivery Type: Design + CM
Coca Cola - UK
Project Type: Manufacturing and Distribution Centers
Contractor: Faithful +Gould –
Nationwide project execution
Delivery Type: Design + CM
Distinctive CM approaches - Employing PM firms
An overall agreement with an international PMC for CM in a consulting and supervision role – In developing regions
Singapore
Client: Unicharm
PM Firm: Hill international
Ukraine
Client: Coca - Cola
PM Firm: Aecom
Egypt
Client: Unicharm
PM Firm: Hill international
China
Client: Kimberly Clark
PM Firm: Jacobs Engineering
Client: Sanofi Pasteur
PM Firm: Technip
Indonesia
Client: Bayer
PM Firm: Royal Haskoning DHV
South Africa
Client: Colgate Palmolive
PM Firm: Arup Engineers
Russia
Client: Kimberly Clark
PM Firm: Jacobs Engineering
India
Client: Roche
PM Firm: Tata consulting
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The next step – a Single CM for multiple geographies?
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Is it possible to have a single CM firm for multiple projects in multiple geographies?
Avoid multiple tenders
Single point of reference/accountability
Easier to implement project construction – on fast track basis
Better visibility for capital projects – across portfolios
Easier to implement/monitor standards and specifications
To save time and money
To increase project quality
Why
The next step – a Single CM for multiple geographies?
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Case: Unilever
Background: Unilever was expanding its facilities in the APAC region – multiple factories in 3 countries
Priority: Fast track project execution, design compliance, supply chain risk, construction laws
Approach: Entered into a partnership arrangement with Royal Haskoning
Betterschedule adherence, easier implementation of standards,
Vietnam
Thailand
Indonesia
Geographies covered
Service Scope
• Consultancy services of design,
• Project Management
• Construction Management
The next step – a Single CM for multiple geographies?
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Case: Nestle
Background: Nestle had multiple capex projects in developing regions
Priority: Compliance to standards, HSE, Design Supervision
Approach: Bundle construction management at a regional level, and contract CM as a master service agreement across multiple projects with geographic proximity.
Benefit: Design compliance, better safety record, better portfolio visibility
The next step – a Single CM for multiple geographies?
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Case: Nestle
Regional level:
• PM Group and M+W group
• Multiple industrial projects
• Design and CM
• Eastern Europe
Multiple Countries:
• Tebodin International
• Engineering, PM, CM
• The Netherlands, Hungary, Dubai, Romania, South Africa, Nigeria, and Vietnam.
Country Level:
• 12 Month engagement
• Jacobs engineering
• PM – CM arrangement
• For all Dairy, coffee and food processing facilities in Mexico.
Consolidation of CM services - Alliances
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If our CM requirements are very frequent is a partnership approach with a supplier feasible?
Case: BHP Billiton
Multiple Projects
By 2015, BHP has to execute more than 12
projects; each project worth over USD 2 billion in Australia alone.
Strategic Alliance
For categories having multiple projects - extended timeframe - same geographic location
Lack of in house expertise
Potash is a new venture - Construction support was required
EPCM Contractor Category Location
FAST Iron ore projects Australia
Bechtel Metallurgical coal Australia
SNC Lavalin Potash Canada
• Engineering and construction support is highly complex and critical • High value • Multiple projects – Simultaneous • Multiple specialty contractors • Low in house management expertise
Consolidation of CM services - Alliances
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Case: Merck
Merck, Various Manufacturing Facilities
Location: Various Locations, USA
Construction Management
USD 1,000,000,000
Hill is assisting Merck to manage its multi billion dollar campaign in the united states by partnering as the construction management service provider .
Very High spend
Separation of design Function
Strict compliance standards / validation
Large Scale of construction
Quick turnaround - 2 years
WHEN??
How should you base your CM contracting ?
In the past the decision to outsource CM services was driven by a per requirement basis, very specific to the nature and scope of the project. – but that’s changing.
Evaluate you in house team
Evaluate your contractor pool
Identifying new areas
Multiple projects
Similar nature projects
By asset type
Complex – engineering and
design
Common geographies
By contractor
Multiple locations
Past project execution
By geography
Service portfolio
Decide Delivery Type
Type of Engagement
with contractor
Identify new Synergies
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